New Investment to Help Struggling Anaerobic Digestion
Plants

Many anaerobic digestion plants are struggling to
make a profit, but landowners, plant owners and operators can now turn
to a specialist investment fund for help.

Aether Energy, which has the backing of institutional investors,
is working with a leading anaerobic digestion operator to acquire
and refinance struggling plants to boost their performance.
“The AD sector is in a difficult place right now,” explains
portfolio director Scott Hunt. “Many plants were set up at
high capital cost, with unsustainable debt levels and sub-standard
operational efficiencies. But these plants can still have a
bright future, and we have both the technical know-how and
the financial backing to help them achieve that.”

Scott Hunt

Given the relative infancy – and therefore risk - of the
sector, many plants were very costly to install, and were financed
on short-term loans with high interest rates. In addition, the
physical construction and technical understanding of how they operate
has advanced significantly in recent years, says Mr Hunt.

“According to the Anaerobic Digestion and Bioresources Association,
[ADBA] which represents the sector in the UK, the average operational
efficiency of plants is just 73%. Some are running at below 50%
efficiency, and there’s no way you can make money at those levels
in the short or long-term.”

This leaves landowners and operators in a difficult position.
“The asset is unlikely to be worth what it cost, and owners may
need to invest to improve operational efficiency, or refinance
loans over a longer period. However, because the plant isn’t profitable,
it’s almost impossible to do either.”

Fortunately, Aether Energy can help, by buying out under-performing
plants or partnering with owners and existing operators to boost
efficiencies. “Typically, we can restructure finance over the life
of the Feed-in
Tariff or Renewable
Heat Incentive, backed by large,
well-respected institutions,” explains Mr Hunt. “And we have arguably
one of the best private AD operators to address the pre-existing
practical difficulties, boosting operational efficiencies towards
and beyond 90%.”

The firm is seeking sites of 0.5MW upwards across Great Britain,
and is offering free long-term financial modelling and valuation,
based on actual performance to interested parties. Its initial
funding is £50m but that can be extended to accommodate larger
plants or portfolios depending on uptake. All
investors have agreed to an open-ended fund structure.

“Whether you are an owner-operator or in partnership with a large
investor, it is highly possible to negotiate new contracts,” adds
Mr Hunt. “Many AD plants need to re-structure to become efficient
in the medium to long term. It is exciting to be able to offer
this lifeline to struggling plant owners and at the same time maximise
the productivity of the nation’s AD plants.”